US Dollar Slides vs Euro, Pound as Trump Eyes New FED Chair

June 27, 2025 - Written by Tim Boyer

STORY LINK US Dollar Slides vs Euro, Pound as Trump Eyes New FED Chair

The Pound US Dollar (GBP/USD) exchange rate surged on Thursday, hitting a 42-month peak amid renewed questions over the Federal Reserve’s independence.

The US Dollar (USD) retreated on Thursday after reports emerged that President Donald Trump is weighing an early announcement regarding the next chair of the Federal Reserve.

Although Jerome Powell’s term doesn’t expire until May 2026, Trump is said to be considering naming a preferred successor well in advance, raising fears of political interference in US monetary policy.

Such a move has raised concerns about the Fed’s ability to operate independently. Analysts worry that a more politically aligned appointment could prioritise Trump’s push for rapid interest rate cuts, potentially undermining the central bank’s credibility.

These developments added to existing downside pressure on the ‘Greenback’, which has been caught in a wave of risk-on sentiment as markets continue to react positively to the Israel-Iran ceasefire.

The Pound (GBP) edged higher on Thursday as markets looked ahead to a speech from Bank of England (BoE) Governor Andrew Bailey.

Bailey’s comments since the BoE’s interest rate decision last week have been broadly hawkish and pushed back against expectations for an August interest rate cut.


However, Bailey also appears wary of the strength of the UK labour market data, which could take some of the wind out of Sterling’s sails if he expresses these concerns again in his upcoming remarks.

GBP/USD Exchange Rate Forecast: Focus Shifts to US Inflation Data

As the week draws to a close, attention will turn to the latest US core PCE price index, considered the Fed’s preferred gauge of inflation.

Should May’s report show a stronger-than-expected rise in prices, the US Dollar may rebound as USD investors trim their Fed rate cut expectations.

That said, if inflation data prints in line or lower than forecast, the current bearish trend in the US Dollar may continue.

In contrast, the Pound may take its lead from overall market sentiment, with little on the UK economic calendar likely to offer much in the way of direction.

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TAGS: Pound Dollar Forecasts